Measures to turn undeclared work into regular employment, Slovenia
With the aim of reducing the extent of undeclared work, the Slovenian government introduced measures to transform undeclared work into regular employment. These measures include personal supplementary work, short-term work and the so-called ‘small work’. While the latter measure has not been successfully implemented, the first two measures enable the persons performing such work to be move out of the category of undeclared workers.
Undeclared work prevents the integration of workers into the labour market. In the process of adapting the labour market policies to the European Employment Strategy, Slovenia developed the indicators for monitoring undeclared work and employment. In 2004, the Ministry of Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve) began to implement a measure of the active employment policy intended to turn undeclared work into registered work. The legal framework for this measure was set up in 2000, when the Slovenian government adopted the Act on Prevention of Illegal Work and Employment. The act was amended in December 2006.
According to Article 7 of this act, personal supplementary work is not deemed illegal. Article 12 of the act stipulates which activities shall be regarded as personal supplementary work. These activities include carrying out supportive tasks in a household and similar work, picking and selling forest fruits and herbs, and under certain conditions making craft products. Work deemed as personal supplementary work may be carried out on the condition that the annual income from this work does not exceed the minimal annual wage in Slovenia from the previous year and it is defined in the rules on work as personal supplementary work. Such work may also be carried out on the procedure of the notification of this work.
The act amending the Act on the Prevention of Illegal Work and Employment introduces two additional exceptions to the category of undeclared work. These include so-called ‘short-term work’ and ‘small work’. The former is reserved for family members working occasionally – up to 40 hours a month – in family businesses with less than 10 employees, while the latter allows work to be carried out legally through a special contract with the employer. Small work is defined as work carried out by someone who is not a full-time employee (working a maximum of 20 hours a week or 40 hours a month, with the wage not exceeding 50% of the minimum wage), does not perform freelance work and is not receiving a pension. The employer must register such a person for social security and wage-related contributions. The performance of such work does not require an employment contract under the Employment Relationships Act.
Apart from the Slovenian Tax Administration (Davčna uprava Republike Slovenije) and the Employment Service of Slovenia (Zavod Republike Slovenije za zaposlovanje), the following entities are also involved in implementing this measure: Customs Administration (Carinska uprava Republike Slovenije), agriculture, forestry and building inspectorates, the environment inspectorate, the health inspectorate, the inspectorate of schools and the police force. These bodies have to notify the Tax Administration and the Employment Service about any information pointing to violations of the Act on the Prevention of Illegal Work and Employment.
The main objective of this measure is to transform undeclared work into regular employment, which is also one of the objectives of the EU until the year 2010 with regard to the issue of undeclared work. According to the act, an individual shall be duty-bound to notify the competent administrative unit about his or her personal supplementary work, so that they are then included in the list of persons under obligation, carrying out personal supplementary work.
Through this initiative by the Ministry of Labour, Family and Social Affairs, the persons who carry out work which is, according to its nature, defined as personal supplementary work can register with the Employment Service. After registration, the Employment Service pays the pension and health insurance contributions of these persons if their monthly earnings do not exceed the amount of the minimum wage. This step consequently enables these workers to have social security cover and encourages the possibility of registering their activities.
The Tax Administration has to keep a record of the annual income of those registered as carrying out personal supplementary work to ensure that the persons performing such work do not receive benefits they are not entitled to. The monitoring of violations of the provisions of the act regulating the prevention of illegal work and employment is assigned to the Tax Administration’s authorised supervisors as well as to various inspectorates.
The amended act also stipulates that unemployed persons and students who are found to be working illegally would be automatically presumed to have permanent employment with the employer even though they had not signed an employment contract with that employer. In such cases, the employer has to provide the undeclared worker with an employment contract for an indefinite period of time; otherwise, the worker has the right to take legal action.
Evaluation and outcome
Achievement of objectives
From the data collected in the recent years, it is estimated that about 2,000 persons a year – although the numbers vary slightly – are registered to perform personal supplementary work. The procedure for registering has been simplified, but on the other hand, strong suggestions have been put forward to prohibit a further increase in the number of registered personal supplementary workers. The majority of persons registered under this category of worker are collecting and selling forest fruits and herbs. This group is followed by those who are manufacturing decorative objects and souvenirs. About 15% of those registered are performing domestic help in households and assisting in cleaning the local environment.
Obstacles and problems
This measure may easily be abused by participants. The major abuse of the personal supplementary worker status, according to the inspectors who monitor the measure, is that persons registered for occasional work are performing this work continuously over the whole year.
While reducing the extent of undeclared work on the one hand, the introduction of personal supplementary work and short-term work lend themselves to some abuses, which have to be taken into consideration.
These initiatives affect a relatively small number of workers. The data regarding the estimated costs and benefits are not yet available.
According to information from the Ministry of Labour, Family and Social Affairs, the category of small work, which has been envisaged as one of the measures to transform undeclared work into regular employment, has not yet been successfully implemented. Slovenia has not developed a suitable methodology for measuring the transition from undeclared work to declared employment. The only quantitative datum refers to the number of unemployed people who were detected in the category of undeclared workers, which results in the signing of an employment contract for an indefinite period of time, usually within three days following the inspection. In 2007, the labour inspectors reported only three such cases.
It is interesting to note that the number of self-employed persons in Slovenia increased from just above 78,000 in January 2004 to about 89,000 in June 2008. This trend could, however, be taken as an approximate indicator of a positive trend in the transition from undeclared work into registered employment.
This measure in principle could be implemented in different countries. The prerequisite for transferability would be a law that would stipulate in detail which types of work count as personal supplementary work and that would define the notification procedures.
Ministry of Labour Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve)
Zakon o preprečevanju dela in zaposlovanja na črno [Act on the prevention of illegal work and employment], Official Gazette of the Republic of Slovenia (Uradni list RS), 12/2007.
Pravilnik o delih, ki se štejejo za osebnodopolnilno delo ter o postopku priglasitve the del [Rules on work deemed as personal supplementary work and on the procedure of the notification of such work], Official Gazette of the RS, 30/2002.
Ignjatović, M., Article on undeclared work from SYSDEM Correspondent (Update of EEO Review, Autumn 2004), Slovenia, European Employment Observatory, May 2007.
University of Ljubljana